Remember that as the temperature rises, so does the maximum vapor pressure, or the maximum amount of water vapor that the atmosphere can hold. It thus follows naturally that as the temperature drops, so does the amount of water that the atmosphere can hold.

What happens to the water in the atmosphere as the dropping temperature causes the maximum vapor pressure to decrease below the amount of water vapor that is already in the air?

When this happens, the water vapor has no choice but to leave the atmosphere in the form of liquid water. The temperature at which this happens is referred to as the dew point. The dew point varies from day to day, and from location to location, and depends on both the temperature, and on the amount of water in the air.